Tata Steel Ltd plans to axe as many as 3,000 jobs across its European operations to cut costs in the latest blow to the region’s industry, with the move coming amid a heated general election campaign in the UK.
About two-thirds of the reductions would be office-based staff, the company said in a statement.
Tata Steel — which has steelmaking facilities in the UK and the Netherlands, as well as other manufacturing operations — did not give a detailed breakdown of where the job losses would be made.
Photo: EPA-EFE
STAGNANT DEMAND
“Stagnant EU steel demand and global overcapacity have been compounded by trade conflicts, which have turned the European market into a dumping ground for the world’s excess steel capacity,” Mumbai-based Tata Steel said.
The European steel industry has faced growing headwinds this year amid declining demand, slowing economic growth and the consistent threat of overseas supplies, including exports from Turkey, Russia and China.
British Steel Ltd, the UK’s No. 2 steelmaker was put into liquidation in May, and is to be sold to China’s Jingye Group Co (敬業集團).
Apparent demand in the EU is forecast to contract 3.1 percent this year, lobby group Eurofer said last month.
The steelmaker’s European operations are facing conditions that are “unprecedented,” Tata Steel in Europe CEO Henrik Adam said.
Other steps to improve performance include boosting sales of higher-value steels, aiding efficiency and cutting procurement costs.
Tata Steel Europe’s earnings before interest, taxes, depreciation and amortization sank 90 percent to ￡31 million (US$40.15 million) in the first six months of the current fiscal year, which started in April, on revenue of ￡3.25 billion, according to the statement.
The job cuts and other moves target positive cash flow by the end of the year to March 2021.
‘DIFFICULT MARKET’
“Europe remains a difficult market, but this is how they can deal with the challenges there,” said Amit Dixit, an analyst at Edelweiss Financial Services Ltd in Mumbai, citing problems also faced by peers, including ArcelorMittal.
“The market will likely react to this proposal in a hugely positive way,” Dixit said.
In a measure of the challenge facing local mills, steel production in the EU slumped in August to the lowest since the financial crisis amid a record jump in imports.
The bloc’s output dropped to 11.45 million tonnes that month, the lowest level since 2009, World Steel Association data showed.
ArcelorMittal, the world’s top steelmaker, this month said that European steel consumption would drop by up to 3 percent this year, the most since 2012.
Austrian steelmaker Voestalpine AG has also been lowering its profit outlook as the industry downturn spreads.
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